• IE
Choose your location?
  • Global Global
  • Australian flag Australia
  • French flag France
  • German flag Germany
  • Irish flag Ireland
  • Italian flag Italy
  • Polish flag Poland
  • Qatar flag Qatar
  • Spanish flag Spain
  • UAE flag UAE
  • UK flag UK

I’m a Celebrity, Tax Me Out of Here

20 December 2018
New rules will have a significant impact on "high profile individuals" who derive income from their fame or image in Australia.

The Australian Department of the Treasury, the federal department responsible for national economic policy, fiscal policy, market regulation, and the Australian federal budget, has released a Consultation Paper[1] proposing new rules (initially flagged in the May 2018 Federal Budget) which will have a significant impact on “high profile individuals”, such as elite athletes, successful actors, and other well-known celebrities, possibly including social media influencers, who derive income from their fame or image in Australia.

Though yet to be finalised, these proposed new rules will remove the ability for athletes and entertainers to separate their “image rights” income from their employment income.

Treasury has opened a consultation period, with a closing date for submission of 31 January 2019, to seek feedback and comment on the broad principles announced, which will shape the enabling legislation.


An individual’s personal income can traditionally be derived from a variety of sources ranging from a basic salary, to dividend and rental income.

However, though Australia does not recognise a right of property in an individual’s publicity or personality rights, athletes and other entertainers often have an additional ability to generate income from their image and its use or application, such as through agreements to endorse products or to give brands the right to use their image or likeness. While many sporting codes require the athlete to assign their image rights to the club they play for and the sporting body in order to participate in the league, elite Australian athletes participating in major sports may still generate income via third parties.

In the context of sport, such income can be significant and may even outweigh the athlete’s playing salary. For example, in the North American National Basketball League (NBA), leading player LeBron James will generate around US$52 million in income this year from endorsements alone - significant when compared to his basic NBA salary of US$33.5 million.[2] Mr James’ endorsement portfolio includes such blue chip brands as Nike, Coca-Cola (Sprite), Beats By Dre, Kia Motor, Intel and Blaze Pizza.

How to define ‘fame’?

Without recognising image rights in this jurisdiction, we have little in the way of direction to apply the proposed changes. To get around this significant hurdle, Treasury posits that one of two approaches may be followed:

  1. Broad approach, opening up scope for judicial interpretation – “for tax purposes, fame or image would cover anything that can be attributable to a person’s reputation or appearance and can include an individual’s name, image, likeness, identity, reputation and signature, irrespective of their occupation or how they obtained their fame or image”; or
  2. Codified approach, as in the High Court of England and Wales case involving footballer Wayne Rooney[3], image rights may be defined as – “The right for any commercial or promotional purpose to use the Player’s name, nickname, slogan and signatures developed from time to time, image, likeness, voice, logos, get-ups, initials, team or squad number (as may be allocated to the Player from time to time), reputation, video or film portrayal, biographical information, graphical representation, electronic, animated or computer-generated representation and/or any other representation and/or right of association and/or any other right or quasi-right anywhere in the World of the Player in relation to his name, reputation, image, promotional services, and/or his performances together with the right to apply for registration of any such rights.”

Why target sportspeople and entertainers?

The problem for athletes and entertainers is that earning high salaries and significant ancillary income will attract a high income tax rate. Couple this with the fact that these athletes and entertainers may only have a very limited window of time in which they are able to sustain this level of income, athletes and entertainers are clearly incentivised to minimise their income tax burden.

One such tax minimisation strategy has been for athletes and entertainers to separate their ancillary income from their playing salary by licensing their image rights to third parties (typically an “image rights company” or family trust).

In some cases, the net result of this strategy can be an almost 20 per cent reduction in the effective tax rate on an athlete’s overall income.

An unfair playing field?

For athletes, this is not the first time their income generation and management has been the subject of scrutiny by the Australian Tax Office (ATO). Tax Ruling 1999/17 (TR 1999/17) ruled that income derived from public appearances connected to a person's employment contract could not be licenced to a trust structure.

The purpose of TR 1999/17 was to prevent athletes from apportioning the part of their income from their playing contract that was attributable to public appearances to a third party trust or company. Athletes were, however, still permitted to licence their image rights separate to their employment income.

More recently, and of relevance to sports teams as employers, in Brisbane Bears – Fitzroy Football Club Limited v Commissioner of State Revenue [2016] QSC 231[4], the Supreme Court of Queensland, on appeal, was asked to decide on the proper classification of player payments (or more correctly, payments made to players’ associated corporate entities) for “the use of image rights”, as being payments of taxable wages and, accordingly, payments which were liable to payroll tax, or not. The Court held (at 60) that ”the payments were for marketing and promotional services rendered and not solely for image rights” and thus payroll tax applied.

Likely impact of proposed changes:

The new rules, to apply from 1 July 2019, propose to limit the ability of athletes, actors and other entertainers to licence their image rights to related structures and other entities, such as image rights companies or trusts. This may result in income derived from the commercialisation of rights to be taxed at a higher rate.

In essence, when it comes to assessing a person's tax burden, the ATO may simply treat any licensing arrangement that separates a person from their image rights to be ineffective.

While player salaries and entertainer payments in the Australian sports and entertainment market are not as lucrative as in some overseas markets, any changes will also likely constrain and make more difficult the ability for local leagues to recruit and retain marquee player talent and for local brands to attract celebrity spokespeople to Australia.

The recent experience of 8 time Olympic Gold medal winning sprinter, Usain Bolt, seeking to transition to a post-athletics career in football with the A-League’s Central Coast Mariners, where the parties ultimately failed to agree to terms on a playing contract due to an inability to secure a third party sponsorship, demonstrates the issue and highlights how this situation will be more difficult in any new regime as proposed by Treasury.[5]

What happens in other jurisdictions?

France - personality rights are protected under article 9 of the French civil code.

Germany - personality rights are protected under the German civil code, as applied famously in the Marlene Dietrich Case[6].

United Kingdom – similarly to Australia, image rights are not recognised. In a report by the UK Committee of Public Accounts in 2017[7], the Committee noted that image right structures represent the most significant tax risk among footballers and other similar professions. The report found that a large number of resident non-domiciled sportspeople have been making use of image right structures to incorporate their image rights outside of the UK.

United States of America - image rights, known as rights of publicity, are generally recognised as legal rights in most US States. As with intellectual property, these rights can be attributed to a separate entity in its whole.

Next steps:

If you are an athlete, entertainer or celebrity, you should consider speaking to your trusted advisor to review any “image rights” agreements in place to assess how these changes will affect you and may be appropriately managed.

If you are a sporting body, brand, or production company seeking to attract high profile talent to Australia, ensure that you receive appropriate advice on the impact of these changes on contracts in place, as well as advice on drafting amended clauses in the wake of the impending changes. Internal functions, such as payroll, may also need updating.

For more information, see our Sports and Entertainment sector experience, or contact the author.


[1] https://static.treasury.gov.au/uploads/sites/1/2018/12/Consultation-paper-1.pdf

[2] https://www.forbes.com/profile/lebron-james/#5d61ef402398

[3] Proactive Sports Management Ltd v Rooney and others [2010] EWHC 1807 (QB)

[4] https://www.queenslandjudgments.com.au/case/id/96967

[5] https://www.smh.com.au/sport/soccer/usain-bolt-s-mariners-tilt-officially-over-after-failing-to-reach-deal-20181102-p50dlz.html

[6] BGH 1 ZR 49/97

[7] https://publications.parliament.uk/pa/cm201617/cmselect/cmpubacc/774/774.pdf

Further Reading